American Financial & Tax Strategies, Inc.
September 2011


Good Night, Irene


Thankfully, Hurricane Irene has come and gone and there was no loss of life in our area.


I know that many of you, however, did suffer property damage. Please don't hesitate to let me know if there is anything I might be able to do to help you. It can be anything from cash needs from your portfolio to negotiating with your insurer.


Remember, if it is anything at all to do with your money or your financial future and security, I am here to help in any way possible.


Also, please don't forget to make and keep very good records of any and all losses you may have incurred and review those with your tax professional.  They are a very important part of the team that works to secure your financial future.



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Look for next issue where I will discuss the Fiduciary Standard under which we operate versus the "Suitability Standard" of brokerage houses and insurance representatives.

Where We Are Today 


By now, perhaps you have had a look at the August statements from your various custodians. The results are, to say the least, disheartening. Most portfolios will show a significant decline for the month. Looking at the total return from the beginning of the year, we also see a decline, but it is a much more modest one. 


In September already, we have had great volatility and, sadly, I must say that I expect it to continue this way for the foreseeable future. What has been happening is that we have one or a series of horrible days followed by one or more spectacular days. The net result may be zero but, as we are all human and emotions being what they are, we may stress about the bad days and miss the relief of the good ones.


As I write this, after all the sound and fury of the last several months, most broad stock indices are down only slightly for the year and significantly higher than they were a full year ago.


Further, for those of you for whom I have the privilege and responsibility of investment supervision, this volatility is opportunity. Click here for a discussion of the "rebalancing" process.


Now I realize that "down only slightly" is clearly no cause for celebration. But it certainly isn't the cataclysm the media would have us believe. As I always like to point out, corrections and volatility are the price we pay for the superior performance of equities over time. Many economists would argue that the greater the volatility, the greater the ultimate return, as the "risk premium" that stocks must pay goes up. It is my belief that stocks are, in fact, under-priced at the moment. How long it will take for prices to match value is anyone's guess, but the the fundamental truth does not change. As always, The Intelligent Decision is to establish a well thought out plan and stick to it.

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